Solving Tajikistan's Energy Crisis

In early November 2012, the government of Tajikistan external pageannouncedcall_made that its national budget for 2013 would include 1.2 billion Tajik somoni (over $251 million) for the construction of the controversial Rogun Dam on the Vakhsh River. Construction of the dam and accompanying hydroelectric plant has been aggressively pursued for years by Tajik President Emomali Rahmon as a fix for the country’s persistent energy crisis.

But Rahmon faces a range of economic and political obstacles, including vociferous objections from Tajikistan’s downstream neighbor, Uzbekistan. Now, the World Bank has become involved in the dispute, agreeing to sponsor two impact assessments examining different aspects of the Rogun project. While the reports appear poised to at least partially endorse the dam’s viability, Rahmon should reevaluate his commitment to Rogun’s construction and remain open to compromises and alternative solutions for revamping Tajikistan’s energy sector.

History of the Rogun Dispute

Designs for Rogun date back to the 1960s, when Soviet planners proposed three massive hydroelectric projects on the Vakhsh River, a major tributary to the Amu Darya, in what is now Tajikistan. The three projects—Nurek, Sangtuda, and Rogun—were intended to help external pageexpand irrigable landscall_made downstream along the Amu Darya in the Uzbek and Turkmen Soviet Socialist Republics while providing electricity for industrial development in the Tajik Republic itself. In warmer seasons, when ice melt increased river flows, hydroelectricity was fed into a shared electrical grid. In the winter, when reservoirs were allowed to refill, the downstream republics would provide the Tajik Republic with fossil-fuel-generated energy. Of the three projects, only Nurek was operational before the collapse of the Soviet Union.

The technically exploitable external pagepotential for hydropowercall_made in Tajikistan today—assuming the exploitation of all natural water flows within the limits of modern technology—is estimated at 263.5 billion terawatt hours per year, the tenth highest in the world. The original design for Rogun, and the one that Rahmon is pursuing today, envisioned a dam 335 meters high (the world’s largest) with an installed hydroelectric capacity of 3,600 megawatts per year. Nurek, slightly downstream from Rogun, is currently the world’s tallest dam, with a height of 300 meters and an annual capacity of 2,700 megawatts. The first of Sangtuda’s two hydroelectric stations came online in 2008, and the external pagesecond followedcall_made in September 2011, adding a combined capacity of 890 megawatts.

But these projects have not solved Tajikistan’s issues with energy. After the collapse of the Soviet Union, both upstream and downstream states felt the consequences of Central Asia’s energy interdependencies. Tajikistan faced an energy crisis that quickly worsened with the 2009 collapse of the Central Asian electricity grid, when Kazakhstan and Uzbekistan withdrew from the system amid complaints of Tajikistan illegally overdrawing energy. The cost of Tajikistan’s gas imports from Uzbekistan has been steadily rising in recent years, and domestic electricity tariffs have not kept pace. The resulting import limitations have made winter shortages commonplace. The website external pageBarknest.tjcall_made, which releases a daily summary of electricity supply for Tajikistan by region, reveals that rural Tajik consumers were receiving an average of five to seven hours of electricity a day as of late December 2012. Residents of Dushanbe and district capitals are external pageexempt from these shutoffscall_made, though in previous years even the Tajik capital has experienced temporary restrictions in electricity supply.

For Uzbekistan, the legacy of the Soviet system has caused concern over the continuation of water flow from its upstream neighbors. Uzbekistan’s economy is heavily dependent on agriculture, and over 90 percent of its external pagefresh watercall_made is currently consumed for irrigation purposes. Uzbek President Islam Karimov has repeatedly stressed that Rogun will strangle his country’s agricultural sector, claiming that the time needed to initially fill its reservoir alone would external pagedeprive Uzbekistan of watercall_made for eight years.

Karimov’s warnings do not account for the fact that the Vakhsh is only one of the Amu Darya’s three major tributaries or for Tajikistan’s claims that it would external pagefill the reservoircall_made over the course of seventeen years, thereby allowing more water flow to reach downstream countries. Nevertheless, Rogun’s proposed 13 billion cubic meter capacity reservoir would give Tajikistan significant control over the Uzbek economy.

Although Rahmon has exclusively pursued the original Soviet design of Rogun, there have been several proposals for smaller incarnations of the dam. In August 2011, the World Bank conducted an assessment of the possibility of building an intermediate-height dam of 120 meters on the Rogun site, though it found the project to be external pageeconomically unsustainablecall_made. In 2004, Russia’s RUSAL aluminum company reached a deal that offered up to $2 billion in external pagesupport for Rogun’s constructioncall_made. Rahmon reportedly abandoned the agreement in 2007 when external pageRUSAL insisted on reducing the dam’s heightcall_made to 285 meters (notably, below the current world record) and its energy-production capacity to 2,400 megawatts.

An Intensifying Conflict

Tensions over the project made headlines several times in 2012. In April, the Tajik embassy in Moscow issued a press release accusing Uzbekistan of attempting to sow social discord in Tajikistan, in part due to its objections over Rogun. The release claimed the Uzbeks had enforced a external pagesystematic transport blockadecall_made on southern and central Tajikistan since 2010 and blocked Tajikistan from importing Turkmen energy for several years. Uzbekistan also halted gas exports to Tajikistan multiple times in 2012, which many interpreted as an attempt to punish Dushanbe over the Rogun dispute. The standoff over the dam reached new intensity in September, when President Karimov, during an official visit to Astana, declared that water disputes in Central Asia had the potential to external pagelead to warcall_made.

Should Rahmon choose to pursue plans for Rogun that Karimov deems a threat to Uzbekistan’s security, the standoff could realistically devolve into low-level armed conflict. Uzbekistan external pageplanted landminescall_made along its borders with both Tajikistan and Kyrgyzstan in 1999, which are still partially undefined, following a series of bombings in Tashkent that was allegedly committed by the Islamic Movement of Uzbekistan. These mines have caused over external page150 civilian casualtiescall_made in Tajikistan alone.

Minor clashes are also common along the borders between the states. After members of the Tajik border service shot and killed an Uzbek border guard in November 2011, residents of Tajikistan’s Sughd Province reported a large buildup of external pageUzbek military equipmentcall_made just outside Tajik territory. In the aftermath of the 2011 shooting, a external pagebridge explosioncall_made in Uzbekistan severed the rail link to southern Tajikistan. While Uzbekistan blamed a terrorist attack, some speculate that the external pageUzbeks committed the sabotage themselvescall_made in order to cut the region’s only major transport link. external pageSeveral incidentscall_made, including a firefight, further increased tensions at the border in late 2012.

The World Bank Steps In

The World Bank became significantly involved in the Rogun dispute in 2010, when it launched its external pageCentral Asia Energy-Water Development Programcall_made, which aims to advise and assist Central Asian states in water management and energy security. Alongside this program, the World Bank began a series of initiatives targeted specifically at resolving the dispute over Rogun. The most important of these was its May 2011 agreement to fund two assessment studies on the project—an environmental and social impact assessment and a techno-economic assessment study. These reports have been accompanied by a series of external pageconsultations and information-sharing meetingscall_madethat aim to promote the review and discussion of assessment materials by representatives from each of the Central Asian republics and Afghanistan.

The final reports are due to be published in mid-2013, though preliminary documents are available on the World Bank website, including the external pageterms of referencecall_madefor the techno-economic study and an external pageinitial environmental and social screening reportcall_made. While these documents do not provide feasibility evaluations, they do give the most in-depth look to date at the technical obstacles facing the project.

Most important with respect to the developing international standoff, the preliminary environmental and social impact assessment provides a thorough examination of Rogun’s potential effect on regional hydrology. The study devotes much of its analysis to the available data on Nurek, which is located only 70 kilometers downstream from Rogun and has been operational for the past thirty years. Analysis of data available from before and after Nurek’s construction shows that the dam has had no effect on the Amu Darya’s annual water flow.

However, this does not mean that President Karimov’s concerns are unjustified. Though Nurek did not affect total yearly output, it had a significant regulating effect on seasonal water variability. The Amu Darya is fed largely by ice melts and, as such, releases little water during winter months. Prior to the construction of Nurek, Amu Darya flow ranged from a minimum of 585 cubic meters per second (m³/s) in January to a maximum of over 4,117 m³/s in July. Nurek had a flattening effect on this curve, raising minimum flow to 893 m³/s and lowering the maximum to around 3,657 m ³/s.

Irrigation for agricultural production in Uzbekistan is in use from April to October. Additional regularization of Amu Darya water flow would have a serious negative impact on agricultural production, both because crop growing in the country is so water intensive and because extra water availability in winter months does not make up for the reduction in growing-season irrigation capacity.

There are thus two major outstanding hydrology questions for the final environmental and social impact assessment concerning both Rogun’s effects and its overall design. First, the report will need to establish what regulating effect Rogun will have on the Amu Darya. The answer to this will inevitably be tied to the capacity and filling rate of the dam’s reservoir. As the initial assessment notes, the new hydropower plant “would roughly double electricity production even if Rogun reservoir were operated in a way as not to change at all the flow situation downstream of Nurek.”

The second major hydrology issue will therefore be establishing the appropriate design and water-management specifications to prevent significant disruption of the Vakhsh’s current flow. The World Bank has noted that the external pagehydrological data neededcall_made to determine these specifications is adequate. However, it is currently unclear whether this will require reducing the dam’s height or generation capacity, options that have in the past been unacceptable to Rahmon.

The preliminary reports also examine a host of other technical and social issues, including regional seismicity and the river’s legal transboundary status. The assessment provides mixed evaluations of several of these issues. For example, World Bank Regional Director Saroj Khumar Jha remarked that interim findings regarding the site’s seismicity and geological stability showed that slope stability and the proposed dam type “ external pageappear to be acceptablecall_made.” But the assessment also cites a 2009 study showing that the Rogun site is designated a nine out of twelve on the MSK-64 seismic intensity scale, which is used to evaluate the severity of ground shaking during an earthquake. The rating indicates “external pageconsiderable damagecall_made to reservoirs” and “ground cracks . . . on slopes and river banks [of] more than 10 cm.”

The project’s downstream opponents have for some time seized on this potential danger. A 2011 article published by the director of Uzbekistan’s Hydroproject Institute argues that a large earthquake would external pagedestroy the Rogun damcall_made, sending a wall of water downstream at 130 meters per second that would wipe out all operating dams on the Vakhsh and flood tens of cities in Tajikistan, Uzbekistan, and Turkmenistan.

The reports’ findings also claim that at least some of the objections raised to the dam’s construction may have been overblown. The results of a draft external pagegeological investigationcall_made suggest that the irregular geological setting on the right bank of the Vakhsh at the Rogun site was caused not by massive landslides—as proposed by a 1978 feasibility study—but by gradual tectonic deformation. The anticipated risk of a major landslide at the project site is therefore considered to be very low. The report does recommend mitigation measures to prevent relatively smaller landslides that could occur if the dam caused the total weight that the rock mass can support to be exceeded.

However, despite—or perhaps because of—some of these positive points and the stress on finding mutually acceptable solutions, it is clear that the feasibility assessments have done little to assuage Uzbek concerns. On February 4, 2013, Uzbek Minister of Economy Galina Saidova wrote a letter to Saroj Khumar Jha external pageaccusing the World Bankcall_made of having a “preconceived position” on the parameters for Rogun’s construction. Saidova based this accusation on the initial opinon of a group of World Bank experts that the dam type and site were suitable for the project.

The letter raises several more issues with the reports’ perceived bias, notably claiming that Tajikistan has repeatedly violated its water-usage commitments under the 1995 Nukus Declaration, which is currently the only regional agreement regulating the Amu Darya. The Nukus Declaration restates a September 10, 1987, agreement on water sharing (Protocol 566) that allots to each state along the river a percentage of its annual flow. Under the Nukus Declaration, Tajikistan is granted 15.4 percent usage rights and Uzbekistan 48.2 percent. The assertion that Tajikistan has violated its obligations, if true, would undercut the findings of the initial environmental and social impact assessment, which notes that it is essential to design a system of operation for Rogun that will not cause Tajikistan to exceed its Protocol 566 allotment.

A Choice for Rahmon

Tajikistan has agreed to cease all work on Rogun until the World Bank studies are completed. In the meantime, Rahmon faces several difficult questions. For example, he has not yet made clear how he plans to finance Rogun, the costs of which are estimated at external page$2.2 billioncall_made. In fact, he has failed several times to secure this funding. After abandoning the country’s deal with RUSAL, Rahmon subsequently attempted to raise capital through a “People’s IPO,” launched in January 2010 (and which by some accounts involved external pageforcing thousands of Tajik citizens to buy sharescall_made in the project). The plans were external pagescrappedcall_made in 2012, having raised only $169 million. And while the World Bank has offered its assistance in mediating the debate around the dam, it has external pagerepeatedly made clearcall_made that it has made external pageno commitments to financecall_made the project.

And although the initial World Bank reports have been met with enthusiasm in Dushanbe, there is no telling what Rahmon will do if the final studies propose reducing Rogun’s size. Rahmon’s 2012 positions suggest a possibility that he may push forward with his own plans for Rogun regardless of the conclusions of the World Bank’s reports. The relatively large budget allocation announced in November was at the time a strong indicator of the government’s intent to move ahead with the project given that the state budget is projected to run a $44.1 million external pagedeficitcall_made this year. Perhaps in a nod to this reality, the allocation has since been reduced by just over 20 percent. But Rahmon has repeatedly attempted to paint Rogun as nonnegotiable for the future of the state, insisting several times that the dam’s completion is “external pageimperativecall_made” and “ external pageof life or death importancecall_made” for Tajikistan. Likewise, his abandonment of the RUSAL deal for Rogun’s construction at a reduced height suggests that Rahmon may be unwilling to negotiate over the dam’s size.

It is possible, too, that the Tajik president’s actions and rhetoric are nothing more than posturing in a regional face-off with a stronger, wealthier, and more populous neighbor. However, while Rahmon may see an advantage in flaunting his country’s upper hand in water control, it is hard to see a positive endgame for Tajikistan. Uzbekistan is currently Tajikistan’s external pageonly supplier of natural gascall_made and its most important external pagetransit linkcall_made to the outside world. Tashkent has not hesitated to use these economic levers in the past, often exerting massive pressure on the Tajik economy. While it is possible that the World Bank studies may throw support behind Rahmon’s raison d’ être, backlash over Rogun’s construction may cause more harm than the additional electricity is worth.

Alternatives to Rogun

The good news for both countries is that there are alternative, and more immediately achievable, solutions to Tajikistan’s energy crisis. The World Bank has advocated several of these external pagealternativescall_made as part of its external pageregional water and energy engagementcall_made, which aims to simultaneously increase efficiency and decrease consumption.

The first step in meeting both of these challenges is to make the provision of electricity economically sustainable. Domestic electricity tariffs in Tajikistan, at 2.25 cents per kilowatt hour, are some of the lowest in the world. While prices have gone up in recent years, the current rate is still well below the rate of 4.6 cents per kilowatt hour that external pagea World Bank reportcall_made estimates residential consumers are willing to pay. Increasing electricity tariffs (with the institution of appropriate social safety nets) would not only provide consumer incentives to use less electricity but also move the Tajik electric system closer to a point where it can be privatized.

Privatization of the electrical grid has long been recognized as an important step in resolving Tajikistan’s energy crisis. As the World Bank report notes, privatization would incentivize upgrading the Tajik electrical grid, where 18 percent of electricity is currently lost due to transmission and distribution inefficiencies. A few selections from a 2009 Asia Development Bank external pagetechnical assistance reportcall_made illustrate that Barqi Tojik, the state electric company, poses a serious obstacle to increasing grid efficiency. The report notes that the company “has no development strategy,” that it “has failed to implement recommendations issued by previous auditors,” and that it has “no Internal Audit Department.” A external page2011 UNDP reportcall_madealso states that the chairman of Barqi Tojik is both appointed by and reports to the Tajik president.

Finally, Tajikistan may be able to dig its way out of its energy crisis by bringing in more capital, which would allow it to both import more hydrocarbons and upgrade its existing grid. To raise more capital, Tajikistan would need to develop the capacity to export the excess hydroelectricity it already produces during summertime high-river flows. With this goal in mind, the World Bank announced in December that it would provide nearly $1 billion to fund infrastructure for the external pageCASA-1000call_made project, which envisions the export of electricity from Kyrgyzstan and Tajikistan to Afghanistan and Pakistan in summer months. Importantly, CASA-1000 is designed to operate on the two countries’ current summer surpluses, and according to World Bank Region Director Saroj Jha, “There is external pageno needcall_made to add any new power generation to make CASA a viable project.”

These ideas for modernizing, as opposed to simply expanding, Tajikistan’s energy sector are not only achievable, they also provide the economically feasible solution that the Rogun Dam does not seem to offer. Rahmon will best be able to provide practical approaches to Tajikistan’s energy security by shifting his focus away from Rogun and toward improving the country’s existing energy sector.